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Do you understand bidding tools?

bidding tools for auctions
Bidding software can make a big difference to your profit per vehicle. There are stand alone packages but if you use Pinnacle, you've already got it.
One change that really stands out to me over the past 10 years or so is the recognition by dismantlers of the value that comes from using bidding software when buying cars to dismantle.

At one time, a quick walk around a car at auction seemed enough to decide on how much to pay: if it was a high end car then two laps around would provide enough information! But as make and model diversity has increased, and interchangeability of parts has decreased, it has become very important to buy the cars that are the ones you really need. And the cars you really need are the ones that have the parts you most need for your inventory.

Pin Pad and Bid Buddy are both bidding tools that use the data collected in your inventory software to calculate a recommended bid for a car at auction. Pin Pad is build into Pinnacle and all Pinnacle sites have access to using it (although some set up is required). Bid Buddy is a “third party” software by Buddy Automotive Innovations in the US that integrates with Pinnacle and other inventory systems. Both work on the same principal – that by knowing the request, stock and sales data for the parts available on a car at auction, you can calculate the projected sales that would come from that car if you bought it. And by applying either a Costs of Goods percentage (Pinnacle) or an Adjusted Overhead (Bid Buddy) to the projected sales amount you can calculate a bid to buy the car and make a profit. And it is not only about making a profit because the first thing that happens when you start buying the cars with the parts you need is that sales grow and vehicles return their cost more quickly, helping to resolve any cash flow issues associated with car buying and business growth.

And when you come across a car you really need (lots of Required parts in Pinnacle) users will find that the calculated bid is often more than they might have thought for that particular car, so it gives them the chance to be more competitive when cars are hard to buy.

Steve Tapner
Steve Tapner is as a past owner of a dismantling business in Australia but more recently (since 2004) he has worked with Actual Systems which then became Hollander International Australia, following its acquisition by Solera Inc. This period saw the introduction of the Pinnacle inventory and management software to the Australian market - from the first sites in late 2004 to 100 plus sites in Australia and New Zealand by late 2014. Since that time Steve has been working as a trainer and independent consultant to the industry.

If you have any questions or would like to ask Steve anything, then contact him by email here.
So how does bidding software actually work?
There are three elements to “building a bid”. One is the parts list you have chosen. In the perfect world we would have lots more hours in the day and we would look at all the parts in saleable condition on a car and let the bidding software assess how much we needed each and we would decide how much value to add to the projected sales based on that. But we don’t have that much time so instead we use a list of preferably about 30 of the highest value part types we sell and we will decide on the projected sales based on the value of these parts plus a “fluff” factor to account for the value of the other parts that may come from the vehicle.

The second ingredient is the Cost of Goods table (in Pinnacle) or the Adjusted Overhead amount (in Bid Buddy). These reflect how much gross profit we need to make or how much cost there is to process a vehicle through our business. The bid is calculated by applying one of these values to the projected sales amount.

The third thing, and this is important to make the bidding tool reliable, is that we “check our stats” in Pinnacle to make sure that the number of searches recorded by sales staff looking for parts in the inventory is not overstated. If sales staff are not doing enough quotes, or not using the Find Quotes screen to find open quotes and create orders when the customer calls back, then they will be searching more than once for every sale.

Get these things right and you will find that using a bidding tool will help you grow your business and make more profit. If you are a Pinnacle user and would like more information, or require help in setting up and using Pin Pad, please contact me. This type of training and consultation is easily delivered using screen sharing software such as TeamViewer.

September 2015

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